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Which way are we going, Mr President?

Contradictions abound when it comes to the economic policies, decisions and actions that are suppposed to be taking the country forward.
Open to investment but closed for business – the economic disasters that have characterised the ANC governments are unforgivable, says the author. Image: Dwayne Senior/Bloomberg

In the wake of the country’s recent unrest, looting and property damage, those leading government have decided that reprioritising expenditure will solve these problems. However, in reality this is a piecemeal solution that is unlikely to stimulate the economy.

The truth is that the economy needs stimulus, yet government has shown that it prefers austerity and fiscal consolidation. The hard and over-the-top lockdown has had a devastating effect on the economy. More than that, it has worsened widespread poverty and unemployment.

I recoil from the assertion that the administration of the democratic dispensation ​marked a ​​defining moment in the socio-economic wellbeing of our society​, because the real impact is often evident with the benefit of hindsight.

For one thing, regardless of the president, from an economic viewpoint ANC rule has been a disaster.

Where we are

First, the Gini coefficient has increasingly soared post-apartheid.

Second, since late 2009/2010 the economy has been defined by a decade of recession that has seen growth trend downwards and contributed to the widening inequality gap.

Third, investment in new and essential infrastructure (for ​example ​electricity and dams) has declined, while​ the​ maintenance of​ existing infrastructure has become costly.

Fourth, there is the facilitation of​ insidious, systematic​ state capture (the other side​ of the coin​ ​being the more well-known individual​ ​unlawful acts like corruption).

The latter has resulted in an incapacitated state; a state unable to reduce unemployment or finance productive investment ​through ​the employment​ ​of idle resources and labour.

Despite my reluctance to call a particular moment of a different administration a turning point, if there was to be an alarm to warn of danger ahead, now would be the time for it to sound.

If we are to evaluate the current presidency solely from an economic standpoint it has been nothing but a disaster – even on seemingly straightforward issues such as public sector wages.

Cut public sector wages … except ministers’?

Consider that while the finance minister’s rhetoric of curbing spending has mainly been directed towards public sector wages, the president has made a case for increments for his cabinet ministers who are pleading poverty.

This is a large contradiction.

It is therefore unforgivable that mainstream economists who picked apart the previous presidency’s policies have been quiet on the catastrophic macroeconomic approach of the current administration at a time of lockdowns that are devastating the economy.

Cut expenditure … during a time of recovery?

One contradiction is National Treasury’s fiscal consolidation by cutting expenditure and employing austerity measures on vital sectors like healthcare, infrastructure, education and the police, yet talking about recovery at the same time.

Surely now is the time to ask (especially the economists) how an economy in dire need of stimulus because of conditions that existed before and during Covid can be in recovery?

Where is the loud calling for economic accountability and stewardship? Or do we reserve those for matters of morality in politics?

How can ordinary South Africans be subjected to the burden of the ANC-led government and its insistence on neoliberal economic policies?

No funding for productivity programmes … but funding for grants?

Another contradiction inherent in government policy and the central bank is a reluctance to use monetary policy to fund productivity and government programmes and also to put money (stimulus) into the economy and not to employ austere rerouting (the recently reallocated R2.6 billion from other departments) into the current band-aid of economic relief and support packages.

The consequences of these policies

Thus far we have seen a glimpse of the consequences of these policies: more poverty, more unemployment, and a volatile environment.

Why is there a muted position on the negative effects of austerity when the over-the-top lockdown has led to a significant increase in the food price, in addition to rising costs of water, electricity and fuel?

So, austerity or stimulus?

For some, austerity might be seen as needed and even necessary. They might argue that amid the lack of growth plans and investment strategies to get the country out of the crisis, austerity as a stabilising tool may be just what the country needs.

However, is it not true that even in advanced economies tight monetary policies can also have adverse effects on investment – as evidenced in the productivity slowdowns of advanced economies prior to the global crisis.

In turn, the slowdowns undermined the TPF – the total productivity factor – when the crisis occurred. Constrained investment because firms’ balance sheets were weakened, resulting in muted investment in high-risk, high-return projects.

What to be most worried about

In the case of South Africa, if you are worried about the negative effect of uncontrolled government spending, rising debt, government hiring, and public sector wages, you must be equally be worried about the merging of politics, greed, corruption and policy choices.

I say you must be worried because, to cite one example, despite the recovery plan and now the economic support package, the presidency and the treasury are yet to clearly outline how the government intends to (i) address the socio-economic conditions of the majority of the populace, and (ii) reboot the economy.

Ultimately, it is critical to seek a dissimilar and even new approach to macroeconomic policy if the country is to have a structural transformation of its economy.

However, as I have argued elsewhere on Moneyweb, it is politics and politicians that thwart any chance for socio-economic relief-oriented policy.

Unfortunately the ruling party has shown itself to be interested in change only if it affects or could possibly threaten its political future. South Africa today faces far weightier economic challenges.

Gloomily, the solution will not come from this government.

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What a joke. The Gini Coefficient. The ANC who was supposed to uplift and look after their ‘own’ people, failed miserably. Even with discrimination against white people, the ANC failed to uplift their own. They only enriched themselves.

Discriminate and murder those that feed, cloth and give them all the nice western goodies.

Direction???? Straight to join those slobbering at the trough, as long as there is a morsel they will forage.

An uneducated and impoverished population are fodder for populist policies and scapegoating ….eg, white monopoly capital.

Throw in a few grants and you’ve got ANC voters. And that’s the point…you vote us in at the bottom and we go looting at the top.
.

There is one sure direction and that is downhill — fast !!!

Clearly I see see another “PLAN” in the making here.

Well presented arguments! I agree with every one of them. This President is compromised in his “philatropy” style as oppose to action real development. SA is not your business; let go Mr President, liberate the people, to achieve what you are failing to do. Where in the world is a President so far removed from reality, boasting about R750bn investment promises. What is this Gov failing to do the satisfy the investors to action? They seem to have more patients than the SAs and see the smoke blown for what it is?

I like your “let go Mr. President” Blunderor, it’s what any normal person not in denial and as thick skinned as a Rhino would do, IF it wasn’t a typical Marxist Party before everything and everyone else scenario!!

Oh, that’s also besides having the trough removed from under their greedy snouts!!

Failed State!

It is simple – you’re on your own. Good luck.

This wait is to let the news cycle and memories of what everyone saw to fade away.

Next will come an argument that this violent rapaciousness is nothing to do with ANC infighting, but rather inequality caused by a lack of transformation.

This will then be used to go after the last intact pools of wealth in white hands.

They were already looking for ways to pluck the golden goose before it could fly away, and this also has the benefit of promoting unity amongst the thieves again

This wait is to let the news cycle and memories of what everyone saw to fade away.

Next will come an argument that this violent rapaciousness is nothing to do with ANC infighting, but rather inequality caused by a lack of transformation.

This will then be used to go after the last intact pools of wealth in white hands.

They were already looking for ways to pluck the golden goose before it could fly away, and this also has the benefit of promoting unity amongst the thieves again

Despite the wonderfully sophisticated(and unfit for purpose) constitution, which is supposed to guarantee our rights and freedom, under the ANC, South Africa remains a backward communalist society where different cultures clash on a regular basis. The war over land and territory has been ongoing for 300 years. Where war parties have stolen some cattle in the past, they now use the legislature to benefit from other people’s property. Where in the past, they needed a spear and a shield to steal from each other, they now only need the ballot box and a pen.

The spineless ANC has dug its own grave by allowing 2 opposing legal systems to operate under one constitution. Their financial and legal support for the tribal leaders kept citizens in slavery and made a mockery of the constitution. They pride themselves on being a “progressive” organization, yet they protect outdated medieval practices. This support for traditional leaders has taught citizens to disrespect the judiciary. They honor their traditional leaders(clan) and they treat the judiciary with disdain. The ANC has made sure that the rule of law remains a western concept. We are moving backward on the road to civilization under ANC rule.

The ANC has been breeding and sponsoring anarchy for 27 years with their narrow-minded bribes for traditional leaders in an effort to buy political support. Now, the faction fighting makes it clear that the ANC has lost both political support as well as law and order. We are back at the beginning where marauding hordes plunder property by violent means. This is merely the logical consequence of ANC strategies.

Well, this is Africa after all ….

Fiefdom will not dissapear from Africa until principle and good policies are implemented. Fiefdom will not allow this

When you are being run by ON-THE-JOB-TRAINEE’S nothing works!!!!

100 years from now the history books on South Africa may simply read: “European colonists first settled on a permanent basis in 1652 and established a society based on a European model. However, unlike other settlements in America, Australia and New Zealand, the colonists always remained a minority and their government was eventually overthrown by the majority indigenous people. Subsequent to that transition, the country quickly regained the system of governance it had prior to colonisation. In such a system, regional strongmen rule without accountability amassing large personal wealth with no tolerance for opposition. Consequently, development stalled and life expectancy, per capita income, and literacy levels all declined for the broader population.” Somewhere in there, you and I lived our lives.The rest is just detail.

This is the concise version of South African history – “South Africa for Dummies”. Well done!

Superbly summed up in a diplomatic way, jnrb!

Your description is fit for a Wikipedia update, in later years.

For the elections over the past decade, I have been blaming less on the ANC and more on the morons who keep them there at the voting booth at each election.

The people get the government that they deserve.

They might be poor and eating sand off the ground, but they voted for it. It’s their fault.

You don’t understand. These people absolutely believe that the anger of the ancestors will come upon them if they vote for any party, other than the ANC. The ANC brought the “liberation” and therefore it is the wish of the ancestors that the ANC should be honoured and supported. I promise you, that is what these people tell me.

But they won’t vote for a different party. They will just demand that the ANC give them more reward for their vote: i.e. the UBIG that is being discussed

I know what ANC is but what is an ESTOR ??? Oh right…ANCESTOR! Lol!
My Estors arrived in 1667 from Holland…and not an ANC to be found …only Koisan…not a Zulu in sight! They’re just Jonny-come-latelys!

Their fault and all complicit in their own downfall and misery !!!

Wonderfully accurate assessment of RSA. My kids seem to agree having just emigrated as the problems here can only get worse in their and my grandchildrens lifetime .

Can I just REMIND everyone that Cyril is the architect of expropriation without compensation…so we all should know where we are going!

CR is hamstrung by consensus

Extraordinary times and fractured loyalty among the royalty is the wrong time to be singing Khumbaya and reaching hard decisions by unanimous committee.

Screw the Zuma faction! They tried, and failed miserably. The country and business will back prompt action to clean out the garbage in the upper ranks.

Halve the number of ministries at the same time. Must be easier to find 18 good loyal ministers than 36…

A well-written article indeed Mamokgethi, the government is no doubt at contradictory odds with itself where stated goals and expediency, on the one hand, are trumped by destructive ideology on the other. The net economic result for the past 27 years has been the same as the urban legendary motto of the voortrekkers, “Kyk Noord en f*k voort”.

If we reduced, I cannot say removed, corruption even with austerity we should be able to finance an expansionary budget. Our honourable ministers tell us R500bn looted over the past years.I cannot other than therefore draw the conclusion that corruption is continuing at the same pace.I have not yet seen a government budget allocating a line item to savings due to reduced corruption.

One way street to another failed African country

What I would find interesting is what the president’s “Special Investment Envoyr” – Jacko Maree, has to say about his presidents’s direction of travel!

So much policy confusion and so many directional contradictions. Correction- that should read directionless.

If you don’t know where you’re going, it doesn’t matter, any road will take you there.

Why would anyone think Cyril would change directions? Why should he? Why should the ANC? Nothing needs to change. The recent riots were just a little schnarfu – nothing worth getting excited about.

What people need to understand is that for the ANC to make any significant change in trajectory for the country, would require the ANC to change every policy it has worked 27 years to put in place. That would be tantamount to admitting they were wrong all along.

NEVER EVER GONNA HAPPEN.

Watch Cyril do the absolute minimum required to keep the status quo – keep things exactly as they are.

There is a new book at Exclusive Books titled ‘The Last Decade of the ANC’. Is there any way we can speed up this process by say…10 years? Never has one party done so much to damage the futures of those they claim to be helping.

To paraphrase and adapt Winston Churchill’s speech after the battle of Britain: Never in the field of human endeavour has so little been done for so many by so few.

The real problem with SA politics is that everyone knows the ANC is corrupt and inept, but the black majority voter base won’t vote for the “white” DA and instead prefers to live in hope (or despair) that the cabal of elite cadres will somehow evolve into competent, efficient, empathetic and honest leaders.

While there are still over 3000 schools using pit latrines ….. the failure of Dear Cyril staring them in the face. Sigh …

Why has the ANC and others (think EFF) placed ‘race’ and hatred of others at the forefront of everything and every aspect of life in this country? So that when it comes to voting the masses won’t betray them and vote for those who can deliver better outcomes. The ANC was supposed to be a beacon of hope for Africa yet they religiously followed all the same failed ideologies and policies.

Because that’s what they do so well?

@Colson. Yes we know, but your thought process is way far more advanced than the intellect of the average ANC voter.

Excellent article and I think the question it posed was answered by the article itself.

Anyone who enjoys Hard Rock will know the famous lyrics, for a Motorhead song on an album released on 9 August 1986, written by Philip Camp and Michael Burston. I will quote the second verse:

“I twist the truth, I rule the world
My crown is called deceit
I am the Emporer of lies
You grovel at my feet
I rob you and I slaughter you
Your downfall is my gain
And still you play the sycophant
And revel in your pain
And all my promises are lies
All my love is hate
I am the politician
And I decide your fate”

A 35-year-old song, yet today it is more relevant than ever.

Great lyrics. Poetry.
Though sad as h£ll

Cuban oppressive marxism seems to be the anc’s “model”….hypocritical ejits!

Yup, and add with that “Stalingrad’ism” as is evident in Zuma’s recent court tactics.

South Africa will “end” (or sink) as country based on a western value system.

And will morph into a country based on African tribal value systems.

(Prince Mashele)

Also, that’s why RW Johnson stated in his 2015 book (How Long…) is that “SA can choose to have a modern, industrialised economy, or the ANC. It cannot have both.”

Superb article. I especially enjoyed the final comments…

Sadly though, too true!

End of comments.

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